DOCUMENTS

November 30, 2010

With the upcoming economic boost – I speak, of course, about the annual slog to buy, buy, buy things – it may be a an interesting time to reflect on how this may portent future events.

I regularly meet with some good friends and we share conversation over breakfast. During a recent meal, one of these interesting fellows noted the increase in Christmas buying this year – something various news sites have verified. He posited the idea that for the last two years, many people have simply done without and paid down their various bills. After years of making the difficult decisions, many people now have a small supply of disposable income.

His premise was simple, even with a real unemployment rate of 15-20% that means that 80-85% of people are still employed. Many of these people have been wise in their dealings and expenditures and these are the people who will be instrumental in bringing back our economy – or at least giving it a tremendous shot in the arm.

Let’s couple this scenario with the incoming spend-thrift Congress and some of the possible schemes put forward. For instance, on Monday, President Barack Obama forwarded a 2-year pay freeze for federal employees. This could provide some savings, but more likely will be along the lines of the sound-bite, bumper-sticker slogans that ending earmarks has – neither method gets to the real issues of entitlements, waste, shrinking government, et al.

Regardless, the changes in political winds, the machinery attempts to remain intact – and by machinery I mean the people behind the scenes who attempt to control the elections, the legislative process, and the monetary systems to name a few areas of control.

For instance, one view of good governmental process can be summed up by the current president:

My task over the last two years hasn't just been to stop the bleeding.

My task has also been to try to figure out how do we address some of the structural problems in the economy that have prevented more Googles from being created.

Barack Obama

In this view, government has the ability to create jobs as well as regulate those who do excessively well or inhibit some other area of concern. Another view recognizes that government is the problem much more often than the solution:

The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.

Ronald Reagan

The interesting aspect to this is the consistent swings between these two views of government and the consistency of the machinery to embrace both views at once. While both parties have increased government in different ways – the bottom line remains: both have increased government. How can this happen?

It is fairly simple – it is basically a shell game. As long as the economy looks to be moving forward, we as citizens become complacent. We accept huge expenditures under the guise of defense or egregious regulations under the guise of environmental protection. As the saying goes, “it’s the economy, stupid!”

And therein lies the interesting point – consider the next election cycle if we perceive the economy has begun to rebound. For all the sound and fury beginning with President George W. Bush’s TARP and continuing through Obamacare, will the public outrage remain if the economy begins to look as if it is turning around?

Of course, this will not be the only mitigating factor. As noted in the previous column, we must be wary of a multitude of new regulations coming down from on-high. For instance, the Environmental Protection Agency has closed its short-window for comment on the Chesapeake Bay Nutrient TMDL Model.

Having a background in this area of study, I sent in a rather lengthy set of comments on this proposal to clean up the Chesapeake Bay. This huge computer modeling analysis extends from New York down to the mouth of the Chesapeake Bay.

The proposals to mitigate the algal blooms are based on poor science and modeling techniques – something we could discuss in a future column. But, more importantly, the proposed solutions are unbelievably expensive with little likelihood of solving the problems. And these expenses will hit each and every one of us! Municipalities will now come under the regulatory authority of the EPA through this program – you have no idea of the costs and requirements.

So, once more consider, if the economy actually does rebound or looks as it is going to rebound, will the outrage remain? Many of the proposals being put forth by government have the guise of doing benefit for the environment or other communities. Will we continue to accept these new regulations because you can’t fight city hall, or will we remain vigilant, even if we desire to return to our happy and fat lives of distraction?

Maybe we can have breakfast together one morning and discuss the possibilities…

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